The two groups

Binance and Bybit both publish long/short ratio data split into two categories. The global ratio covers all accounts — mostly retail traders. The top trader ratio covers accounts in the top 20% by trading volume — often called smart money.

Neither group is always right. But when they disagree significantly — by 8 percentage points or more — it tends to be meaningful. Historically, the top trader group has been a stronger leading indicator.

Why top traders tend to be more accurate

Accounts in the top 20% by volume are typically more experienced traders, trading firms, or algorithmic systems. They tend to be more disciplined, use tighter risk management, and are less likely to be caught up in emotional decision-making or social media hype.

Retail accounts, by contrast, often pile into longs after big rallies and into shorts after big drops — the opposite of what experienced traders do.

How to use this signal

On its own, the long/short ratio is interesting but not actionable. As part of a broader picture — combined with elevated funding rates and rising OI — it becomes genuinely useful context.

If funding is high, OI is rising, retail is 65% long, and smart money is only 45% long — that combination has historically been a strong caution signal. Not a guarantee, but a reason to reduce risk rather than add it.

The contrarian angle

Extreme retail positioning in either direction is a contrarian signal. When 70%+ of retail traders are long, the easy money has already been made — everyone who wanted to buy has bought. The next marginal move requires even more buyers, who are getting harder to find.